EP 31: How to Get Disaster Capital using the SBA and ISBDC

Eric Armacost  0:00  
Welcome to another special edition of the defenders of business value podcast. On today's show, I have two guys that have a ton of information that will help you as small business owners get the capital you need to just get past this, this Coronavirus,

Ed Mysogland  0:19  
the first time, Eric Armacost. He is the lead lender, relations specialist with the Small Business Administration. And David Watkins. He is Indiana's acting state director of the Small Business Development Center. And both of these guys are loaded with, with where to go, how to go and when to go. So I hope you find this information helpful. And like always, if there's anything that we can do on our end, do let us know.

Eric Armacost  0:49  
Please welcome please welcome welcome. This is another episode of the defenders of business value podcast, a podcast where we talk about what makes a business valuable learn the tips and tactics to increase your company's value that only veteran filmmakers know. And now here's your host it Michael glamp. Good morning. This is Ed Mysogland, the managing partner of Indiana business advisors where we help small and midsize business buyers and sellers. Today, you know, there's probably no greater time in probably most of our lives where we need the Small Business Administration to come alongside small business to help them through this crisis. This this Coronavirus mess that we're we find ourselves in. So today, we have Eric Armacost. He is the lead lender, relations specialist of the Small Business Administration. And David Watkins is the acting state director of the Indiana Small Business Development Center. So those guys are going to come on, and we're going to talk through what's available for small businesses to help them survive. And then once they get through that, how, how do they take those next steps. So a couple of housekeeping items, this is being recorded in two places. One, we will make the the entire webinar presentation available. And number two, it's being recorded for our podcast, defenders of business value, and it too will be pushed out later today. So Eric, why don't you go first and give a brief introduction of you and how you're going to help us get out of this.

Good morning. Thanks very much for having me on this morning. And thanks, everybody for for dialing in this morning. If I could have the next slide, please. So, as I mentioned, my name is Eric Armacost. And I'm the Lead lender relations specialist for the United States Small Business Administration here in the Indiana district office, on the Small Business Administration, or SBA is a cabinet level agency of the US federal government.

So up until about a week and a half ago, I and my team spent about 90% of our times working with commercial bankers and business bankers to help them use SBA core loan programs, the SBA 75 Before programs to help them use those programs to make loans available they capital available, were otherwise it would not be for small businesses in the state of Indiana. So, like you were also learning about SBA disaster response, we've spent the last week and a half ramping up to the greatest extent possible. I'm here today to talk with you about the resources that are currently available. And I know that everybody has a lot of questions about proposed legislation that's on this underway right now. And I understand that that the Cares Act or the corona, virus aid relief and Economic Security Act was passed the Senate, but to be clear that that's passed, the Senate is still has to get passed to the House of Representatives to be approved by the President. And none of that's happened yet. So that's all still in the works. And then I have I have some questions just like you do about what's actually going to come down, I can't really speculate on those things that are not enforced currently are not available currently. But I'll be definitely discussing what options are available and what resources are available right now. Next slide, please.

So right now, there's a small business owner in the state of Indiana, you can apply for the economic injury, disaster loan, that's a direct loan from United States Small Business Administration. And there are some eligibility factors that come into it in that but I will say that a lot of those criteria have been relaxed. If you've not already applied for the economic injury disaster loan, or that they're short or short handed over the term of art used as idle loan. If you've not already applied for nine alone, I strongly encourage you to do so as a small business owner, even if you're not 100% sure that you're not paying any capital now. We don't know when this crisis is going to be resolved. And the application process is going to take some time. As you might imagine, there are a number of folks that are interested in getting support and what what shape that takes what form that takes and the timing of that are still very much in question. I would encourage you to go ahead and start this application process. You can always decline to it.

Get the funds later down the road to be able to better option becomes available, where you discover that you don't need to take out a loan for your business down the road. Next slide, please. Okay, so the economic recession alone, there's a loan. So there is a credit history aspect of this, I can't tell you exactly what the credit criteria that the Office of disaster assistance is examining when they're offering these loans. But I can tell you that the credit approval level is lower than conventional lending standards, there does have to be, however, the reasonable expectation of repayment of the loan. And as a borrower, you'll have to meet certain eligibility criteria. Now, unlike our core loan programs, in this case, it does include some larger businesses. And it does include a number of nonprofits. So again, if you have an organization and you're not sure the trailerable eligibility or crashing application process is not incredibly difficult. If there's a question about your eligibility, I've encouraged you to apply, it won't take you that long to apply, and at least you'll be in the queue to be considered for funding it down down the road. Next slide, please. So how much can you borrow under the idle order the economic injury disaster loan, the maximum approval amount is up to $2 million. So it's really not everybody's going to qualify for that there has to be, again, the reasonable expectation of repayment for this loan program. But the maximum approvable amount under this one program is $2 million. Interest rates for for profit concerns are is 3.75, and for nonprofit organizations is 2.75. And these loans can be approved for up to three years. So it's a 30 year term, at relatively low interest rate, for the most part, those payments are very reasonable. And in fact, the terms are typically set based on your historical ability to repay loans, and will be considered on a transaction by transaction basis. The thing I want to point out is I've got a lot of questions from applicants who said, Well, I've applied there was never a place where they asked me how much I wanted to borrow. And that's because essentially, the underwriters are treating this nows somewhat like a credit card application in the sense that they're going to approve you for the maximum amount that you can be approved for. And then you can simply decline to accept the full amount if you want less than that. So if you want the full amount, and you take the full amount, if you want less than the full amount that you're approved for, you are welcome to take less than that. On any of the question, I guess, well, can I use this to refinance my existing debt? And the answer is mostly No. So if you have an existing loan maybe has less than favorable terms, maybe you should reconsider that refinancing that loan. But that won't happen with economic injury, disaster loan, these loans are meant to be used to help you with your short term cash flow needs. So if you have payments you need to make on a loan. Yes, we can use that. If you have payroll, yet Accounts Payable yet. But refinancing debt or buying new capital equipment is a no. So again, working capital and current payments. Next slide, please. So what are the collateral requirements? So a couple of things I'm gonna go into go into on this number one, essentially, for any loan over $25,000, tsps, and a seek whatever Clara was available till the lows fully secure. And that's going to mean all the fixed assets of your business, any trading assets of your business, and if there's still a collateral shortfall compared to the loan amount that you're borrowing, they're gonna look for personal assets to secure that. Typically, that is a first second 12th lien on your on your personal real estate. So the other part of this is that if there's not collateral available, there are there are several businesses that we support that are dependent have a lot of fixed assets, when it comes immediately to mind or like an insurance practice or even a medical practices renting a facility instead of owning. And there's there's tremendous intellectual property there. But but there's not fixed assets, they're collateralized. A big collateral shortfall is not a reason that you'll be declined for application. Next slide, please. So what kinds of businesses can apply, as I alluded to before is basically at this point, the the SN SBA does stand for small. And so there's a science standard that's applied on that's currently under review. Again, that's the speculative, we don't know exactly where that'll wash out right now, the standard is basically driven by your North American Industrial Classification System code for next code. For the most part, I think it's something like 94% of the businesses in the state of Indiana qualify for SBA support. If you're a large concern, you probably have a fairly good idea of what that is, I would encourage you to go to sba.gov/size and as your North American Industrial Classification System code, and there's actually a searchable database that will tell you what standards apply to your particular industry and you can see if your organization meets those standards or not. So, the next bullet point in the slides are not applicable because typically disasters happen under constrained geographical area. In this case this this pandemic affects the entire country. So we can we can skip that bullet point. Next slide. So the other question that gets a little wood banks can I go to to get this loan and the answer is you don't get the on the economic injury disaster loan program. And again, there's there's this is one facet of the other response to this outbreak, but this is specific for grant has a direct loan directly from the SBA. To apply, you simply use your favorite web browser and go to disaster loan.sba.gov. I've also discovered if you use your web browser and just search direct SBA disaster loan, Your search results will include that to the application portal. There's also a ton more information about this program and other programs that the SBA offers on our website. A couple other points to raise here. There's that there's no FBA fees involved with these economic and injury deaths. I'll be holding again this economic injury disaster loss. So there's there's no FBA fees involved in this. However, if we are using real estate, and there's the need to file a lien, there's going to be a lien filing charge or if there's some other third party fee that comes into the underwriting of the of the loan, there will be third party fees are not used to enrich the SBA programs at all. They're simply used to offset the cost of actually putting the loan in place. So just transaction costs. There's also no obligation as I mentioned before, if you're approved for this loan, and you discover that either you don't need the loan, or there's a better program that's been rolled out geo FIDE, you're you're welcome to decline this loan and move on to the next thing. In terms of collateralization. If you have a loan amount of $25,000 or less, there won't be the need for collateral. You can always offer it, obviously. But it's 25 or less, you won't necessarily need to provide any. So if you have existing disaster lumbar support, unfortunately, Indiana experienced some some unfavorable weather, particularly for folks in the agricultural industry that caused some issues. There's also been flooding in some other weather related disasters that were forced prior to the Coronavirus outbreak. Having that disaster alone does not make you ineligible for the economic injury, disaster infection totally eligible. So these are the other claims. Go ahead. Next slide please. The other question that comes into play with respect to collateralization or securitization is personal guarantee? And the short answer is yes, there is personal guarantee required for the economic injury disaster loan program. And again, I know that there's speculation there's going to be the elimination of a personal guarantee on some loan programs. That's not an accurate yet and does not apply to this loan program. So if you're a 20%, or more owner of your business, a personal guarantee is going to be required. So the basic filing forms, and again, this information is available in disaster loans@sba.gov. But essentially, there's just a very truncated underwriting tax that has to be submitted. On that portal, let us discuss disaster loans best@sba.gov, you will discover that there's an SBA form five, that form is generally for LLCs. Corporations. If you have an S corp, or a single member, single member LLC, there's a supplemental form

called a Form five c. And that's actually the form that you're going to use this spelled out on the website. And essentially, you'll also notice that some of these documents appear to apply and more for individuals. Please keep in mind that the disaster assistance programs are meant to cover businesses and individuals both so if you're there's a hurricane, the SBA supports business owners as we do in our corporate loan programs, but also homeowners whose homes have been destroyed. So some of the documentation can be applied to either single member LLC sole proprietorships, or in the case of other disasters, not the one wherever other disasters can be applied to individuals. So the other thing that I need to point out is that there is going to be a verification process with the IRS. There's IRS Form 45 Oh 60 That has to be completed and submitted so we can verify the tax information we have is true and accurate. I will I will be fair and say that the IRS has been overwhelmed with these applications. So there is a little slow down at the IRS getting the faster answers back. And that is a choke point in the current application process. We're working with them to help them streamline their process and helping to kind of get that speeded up to the greatest extent possible currently, we will need your last year's tax returns we haven't filed. Thank you. What we'll need is your 2018 Plus interim financials, your schedule of liability or be reported on SBA form 2202. This in fact is just sort of lays out your your current obligations and will spell out your total total liabilities and then your monthly obligations and then a personal financial statement, which is essentially a personal balance sheet which lists your personal assets and liabilities. For your particular requests. There may be additional documentation as requested that this is the core information that's going to be required. This can be submitted in two ways. We're actually really three ways essentially the portal that's there that does astral and SOS va.gov. You will fill out an electronic version of these documents and then they are uploaded directly there. That's one method. He could also email at least to the disaster loan customer service center. Again, their websites on their web or question their email address is on their website. It's disaster loans sba.gov or you can mail them into the disaster loan center. The address is given later in the slide decks in Fort Worth. Next slide please. So, additional filing information that may be requested. If you have a very thick tax return. Again, you're gonna need schedules and that sort of thing. To be able to verify if you're asking for $2 million, that your sort of normal operations from normal business operations would lead to that sort of proper that sense that that sort of revenue, that the substantiate the request and by looking at your historical cash flow essentially. So in some cases to will require us to be a form 1368. This is your monthly sales figures. Again, this goes back to substantiation of your request. Next slide, please. So, there are a couple of business types that are not eligible for the economic injury disaster loan program. And there's a lot of confusion about this, I'll try to be as clear as I can on what we know at this point what is eligible and what is not eligible, specifically, farms and then at the end of that's a big deal. So there's a lot of small family, small family owned farms that are hurting right now, just just like a little a little, a lot of other small businesses, unfortunately, they they will not qualify for the economic injury disaster loan program solely for their commodity production or their crop or livestock production operations. However, if they are a Value Added Producer, so you're not just milking cows or making cheese, you're not just growing apples, you're making applesauce. If you're there, if you're a Value Added Producer, and if you are, you'll know, then you would qualify for that aspect of your operation. So so we're farming livestock and grain production is not eligible. valuated producers are religious organizations or not are not eligible for support under the economic injury disaster loan program. So we get a lot of questions on this or what if it's a childcare? And the answer is maybe I would suggest going ahead and applying. So the poor church operation would not be eligible, but affiliated operations with the church, maybe, depending on how that organization is structured. The same is true for some charitable organizations. Although just kind of briefly, I would say most charitable organizations can qualify for 501 C threes. We've seen more questions on non charitable organizations that are structured as 501 C sixes. Also, no gambling concerns, as you might have imagined to seniors and racetracks are also out. So I kinda goes without saying that anybody that's involved in any kind of illegal activity won't be supported. So in in the in Indiana, it's such a big deal, but it states where recreational and medicinal marijuana is legal in the state is still not legal federally, those businesses are not eligible for support through this program. Next slide, please.

So I alluded to this a couple of times, again, the way you apply for the economic injury disaster loan, is to visit the website disaster loan.sba.gov/ela. That's on this particular page goes directly to the page where they discuss not just what the programs are and how to get the documentation, but actually there's the applicant portal. And you can also download paper forms and mail them to the one night or question 149 to five Kingsport road Fort Worth Texas addresses listed on the slide. I also want to point out this earlier, anyplace in the slide deck where you see the blue text is underlined as a hyperlink, as you click on that, when forth next to slides emailed out to you, you click on that hyperlink, it'll actually navigate you directly to that additional resource. So it's just something handy to have there. In addition, I've tried to answer a lot of the questions. So I can I'll continue to answer your questions as we will live in the q&a section, I can assure you I'm not going to know the answer to every question. So so there is a customer service center that focuses solely on the economic injury disaster loan program. So if you've got a question about, you know, your specific application or where your application is in the process, that sort of thing, I can't help you with that, I have to encourage you to call the customer service center, and they could probably shed some more light on that. Next slide, please. So I'm getting ready to tee up on my partner David walked in Susie, arm State Director for the Indiana Small Business Development Center. The Small Business Development Center, works hand in hand with the US Small Business Administration to deliver counseling services to small businesses in the state of Indiana. I will say that we rely on them heavily to execute the non financial aspect of our mission. And with that, I will be turning it over to David.

Erica  19:17  
Thanks, Erica, appreciate it and happy to chat with everybody very briefly here about the Indiana Small Business Development Center. So as Eric mentioned, the Indiana Small Business Development Center or what we call the SBDC, is actually a nationwide program. There are 64 SBDCs across the country. And it is a partnership between the SBA at the federal level, and the state of Indiana through the Indiana Economic Development Corporation to focus explicitly on small business economic development activities. We primarily do that through technical assistance programs. We've been in existence since 1984 here in Indiana. And most of the time, when we're not in the middle of a pandemic, our services revolve around things like business planning, and even valuation and exporting assistance. Here in Indiana we have 10 regional offices, which you can see on the slide. Each of these regional offices covers the counties that make up their region. Each one is hosted by a higher ed institution. So for example, in Fort Wayne, our offices hosted by Purdue Fort Wayne, in Indianapolis in the central region, our offices hosted by Butler University and across the state except in Evansville, where we're hosted by the Southwest Regional Chamber. Each of these offices employs a team of what we call business advisors. And those business advisors are typically former business owners, entrepreneurs, entrepreneurs themselves experts in a given area who help both entrepreneurs and small businesses across the state. And as Eric mentioned, small business is basically Indiana business. So the exact number last I saw that from the SBA actually was 99.4% of the businesses in the state of Indiana are small, by SBA definition. So when Eric is talking about small businesses being the having the economic injury disaster loan available to small businesses, that's that's what he means 99.4% of the businesses in the state of Indiana. So as I said, normally we are focused the Indiana SBDC is focused on helping people start their business grow their business, we're doing business plan development, helping manufacturers grow by identifying new markets and customers running market research reports. We work a lot with our lenders and like the SBA office here to help with financial packaging and lender support. And then also exporting and importing, you can go the next slide. So in a disaster situation, as Eric mentioned, normally, disaster declarations involve natural disasters, things like tornadoes, or hurricanes. In Indiana's case, we actually have a couple active disaster zones for flooding. And people that have been able to get access to assistance because of the flooding. And the SBDC. As as a virtue of our relationship and our partnership with the SBA at the federal level, we're called on to help in those disaster declarations help small businesses kind of doing what we normally do, but with a specific focus on disaster planning, business resiliency, helping them access things like economic injury, disaster loan, other funding sources as we can identify them. And then at the end of the day, really helping them pivot the restaurant or their business or adapt their manufacturing line to less workers or understand what their responsibilities are for allowing leave or what resources are available outside of federal funding options. And so as for COVID-19, explicitly, in this current pandemic, we have rolled out a number of different things to help the businesses, small businesses of Indiana, the first and again, like Eric said, these are hyperlinks. So when you get to slide deck, you can click on these. The first is our ispc.org. Page, Indiana COVID-19, Small Business. This page, we've been trying to be very, very discerning. There are a lot of resource pages out there right now. And I don't know if you're like me, but some of them can be rather overwhelming when I open a web page and I see a list of 20 links. And I think do I have to click on every single one of these to find the answer I'm looking for. And so we've tried to take a very, very discerning approach to listing the most relevant things to as many small businesses as possible. That doesn't that means that we don't have the answer for everything on that page. But we think that the information that we're providing there is is of high value. If you want to know whether your business is small or not. You can go to sba.gov/size. We have that link. On our website. We've got the link to the economic injury disaster loan. We've got a link to SBA lender match program which helps people find traditional SBA backed funding, non disaster funding, we've got a link to local Chambers of Commerce and other financing that we have been able to identify the different banks and lenders have rolled out specific to their response to COVID 19. We have our Resource Guide, which you see a little screenshot of there that goes over not only the economic injury disaster loan, it also goes other over other funding options.

has a section on Our business insurance and some questions q&a from the Indiana Department of Workforce Development, to go over unemployment insurance and other things that are impacting small businesses and their operations, we also have links to a series of webinars that kicks off next week that we're doing in coordination with a generator generator and the Indiana Economic Development Corporation. The SBA district office is involved in that as well as our some of our regional offices to go over again, local resources, state resources, federal resources, but also to dive into some of the ways that our small businesses are adapting, you know, the most obvious one that people can see and understand right away are some of our restaurants, they're having to switch to solely takeout and delivery. Maybe they weren't doing takeout delivery before, maybe it wasn't as big a part of their business, and now they're needing to do it to survive. We're having conversations with those type of businesses and others about how they can adapt their operations, find areas to collaborate with other businesses find resources to help them survive, and identify areas where they can smartly and humanely cut back so that they can save as much cashflow as possible. As, as Eric mentioned, we have been helping a lot of people with economic injury disaster long probably, I mean, hundreds of businesses, and that's via webinars like this walkthroughs video walkthroughs, we have a guide from the SBA, actually, that is a step by step on how to apply for this loan. We've been doing a lot helping people with the documentation, obviously, there are the forms, and you know, you all know your name, your social security number and the address of your business. But when it comes to projections are scheduled liabilities, or a p&l statement, or trying to get an idea of what your economic injury might be from, say, the end of January to the end of June, that's where we have been helping people put together those financial statements, understand what the impact of the COVID 19 pandemic has been on their business to date, and what it might be over the next couple of months. Because that's an important part of the SBAS analysis in terms of how much funding someone could be able to claim through the economic injury disaster loan. So we've been helping people with that process. And, and to Eric's point, you know, I would say that, on average, it's taking about an hour and a half to two hours. For the clients that we're working with to complete the application. Now, it's changed a little bit and that you fill out the forms an upload or email them versus the online, fill out as you go. But I would still say if you have all of your documentation together, it goes a bit quicker. One of the best tips I can give people is get the documentation together ahead of time, Eric, slides contain all of the documents that you know you're going to need, you can download them, fill them out, but make sure that you have those required documentation. One, it makes the application go quicker. And two, when the SBA loan officer reaches out, every time they reach out, it just delays the processing and funding more. So if they say, Oh, we didn't have this document, please send it Oh, we don't have this document, please send it Oh, we don't have this document. It just becomes this back and forth. So as much as you can provide upfront, that makes that loan officers job way easier to get that loan out the door. And then the last thing that we're helping people on is Resiliency and Recovery planning. So you know, we're hopeful at the Indiana SBDC that, you know, come August when they've rescheduled the Indy 500, everybody will be back to a somewhat semblance of, of normalcy. And our hope is that we can help our small businesses get through this current period and on to the next period. As Eric mentioned, there's a lot of legislation and questions and how do I get this? How do I get that flying around at the moment? And And as of today, everything that we've presented is 100% accurate as of today at 9:20am, I should say. Because whenever the the House of Representatives starts voting, and we all kind of know eighth grade civics here, right, both houses of Congress have to pass a bill. And then it has to get to the President's desk for signature, and then everybody at the federal level all the bureaucracy kind of starts analyzing and understanding what their responsibilities are and how they're supposed to be helping small businesses. That doesn't happen overnight. And so as much as we would love to help people get connected to you know, some of the new programs that I'll be at are I'm excited for potentially coming in to be in the being via this legislation. They're not there yet. We can't there's no answer. I don't have any answer for people as to how they can go, you know, for this new loan program, because it doesn't exist it right now it exists on piece of paper, and a congressman or congressman his office. So we're trying to help distill that information down for as many small businesses as we can. Next slide. I think we're on to the q&a.

Eric Armacost  30:10  
Okay. Well, I'll I'll moderate the questions and answers. We have a slew of them in the chat and as well as email, but I'll go through this one. So what's the difference between SBA loans in the federal bill and grant money available to float payroll and operations? Are these loans forgiven or not?

This is, Eric, I'll take that one. Long story short, right now that the same SBA loan programs that were in place pre crisis are in place and currently available with one exception. We've enabled our SBA express lenders people to offer what's called an SBA express bridge loan. So in fact, what that bridge loan is designed to do is to help provide short term gap financing between the current need and the long term belief that we're hoping it's going to be enacted shortly, as David alluded to, there's a tremendous amount of speculation about forgivable loans and grants and low interest rate loans and 100% guaranteed loans. And we have the same question as you do in terms of a When's that going to be available? It's really up to Congress at this point, to take that theory and bring it into law. So we don't have anything right now with the forgivable loan aspect. We don't have any grants right now. Right now we have the products, we had pre crisis, with society enhancements and the available of gap financing added back. We're encouraging our banks, credit unions and other mission focused lenders to make bridge financing with or without us right now, and those, those funds can then be later refinanced with SBA supported funding.

Okay, if I do not have any workers at this time, how can I qualify for the loan program? Does this apply to part time workers?

So I think they're talking about the payroll protection plan. That's, that's currently again, in theory, not in practice, they would absolutely qualify for economic injury disaster loan funding, they would absolutely qualify for gap financing from their lender, they would absolutely qualify for conventional lending promote from a lender or SBA supported loans to this the more core 78504 loan programs.

What I think you you've touched on the process for the seven eight loans, or just the loans, can you give a brief overview on the the process for the seven, eight loans under the proposed economic stimulus bill.

So here's what I can say. There are really two channels that funding is going to occur through with SBA support. The first is this direct loan program, the economic injury disaster loan program. And that's available in the portal that we've been talking about. And that's been the focus of my conversation so far today, right now, you can go to your conventional lender, your traditional bank, credit union, or the lender that you're accustomed to working with, and ask them for lending, they may use a seven eight loan program to support their lending to you right now. And they may do that on a bridge loan that's intended to be refinanced with more permanent financing later after the crisis. Or they may make they're just a traditional conventional loan you and that, frankly, may still be the best deal for you. Some of the other proposed programs that we're hoping to come rollout later, will also come through banks, credit unions and other mission focused lenders, and not directly from the SBA. So there will be those same lenders are going to be able to offer whatever enhanced programs are coming. So I would ask you to stay tuned, when those are rolled out, we're going to train our lenders and how to use those programs. On the one when there was lenders are trained up on how to use those programs, they'll be able to offer you those those terms.

Erica  33:46  
If I might just amplify what Eric said there. Talk to your lender, your current lender doesn't matter whether it's just a current line line, you have a credit line, or some type of financing vehicle or even just a checking banking account, right? I mean, your current lender if they participate in one of these programs, like the seven a which existed before all of this COVID 19 pandemic, Bill know, so talk to your current lender, because that's the that's the first place to start. And if the lender doesn't participate in SBA programs, well, I'm sure they can reach out to Eric to figure out how they can participate. And then second, they, you as the borrower can go to the SBA lender match website, which is essentially like a dating service for borrowers and bankers, and SBA backed loans. So there's a link for lender match on our website, you can just Google SBA lender match and find it. But regardless of whether it's available now as of today at this moment, or whether it's available at some time in the future, based on some economic stimulus bill, the starting point on on this kind of stuff is your Current lender, the starting point for your economic injury disaster loan, that would be the SBA, they lend that money directly. But 478 loans, five oh fours or anything that's kind of coming down the pike, talk to your lender, you should be talking to them anyway, because they may be more than willing to work with you on on deferment of payments or forbearance, or even a new financing vehicle to help you get through this. So talk to your current lender.

Eric Armacost  35:25  
Yeah, and one of the follow up questions regarding that had to do with would the loan go faster if the lender is a preferred lender?

So I can speak to that the the short answer is usually yes. What a preferred lender is is a lender that has demonstrated a certain attitude or certain level of competence and underwriting and approving SBA guaranteed loans. So we allow them with oversight to operate independently or with delegated authority where they could do their own approval and offer an SBA guaranteed product without SBA for review. So typically, that is a faster process than than the under the loan being underwritten by the lender, and then them submitting it for the SBA to also co review. So the preferred lender program or p2p lender, program, lenders typically can now turn around a loan application faster.

What is the estimated time when disaster loans will be ready to fund if approved?

So again, this is Eric with respect solely to the economic injury disaster loan program, vessels that are available right now that you can apply for right now. The historical turnaround time has been has been between 21 and 30 days. Now, as of yesterday at about 10:30pm. The Office of disaster assistance is reaffirming that that is their expected turnaround time between application disbursement of funds. So that's really the best estimate I can give you on that at this point.

Okay, so irregular payments to contractors for maintenance and repairs of actively managed real estate businesses eligible for this loan forgiveness under the proposed legislation.

So under the proposed legislation that's yet to be determined under the economic injury disaster loan program, the answer would be if it's a real estate investment. Yes. If it's property development, probably not. So if it's new developments, that those are typically not eligible, but that's existing real estate that is, you know, like apartments or other non owner occupied real estate that landlord is managing that landlord can apply for assistance to the economic injury disaster loan program, and be supported and making regular payments to their their ongoing accounts payable.

Can should I be getting an SBA loan and also a grant from FSS a or just one?

That's a fantastic question. So I would encourage you, again, to apply for the economic injury disaster loan program, if you're if you're a business owner, we don't know exactly what the full breadth and depth and the scope of the response is going to be from not just the SBA, but from the consolidated federal, state and local governments. There are a number of proposed programs underway, not just at the federal level, but at the state level of at the local level all across our country, what's going to be the best fit for your particular needs? I would not speculate on I would say that it makes sense to to avail yourself with the resources that you know, are available now, understanding that you may have a better opportunity down the road.

Erica  38:35  
Yeah, and I would also say, as it relates to the economic injury, disaster loan, just to reiterate what Eric said earlier, you don't have to take this loan. So I mean, I think if you go through the process, which I agree with Eric, go through the process and submit the application, because then it will be a tool in your toolbox if you need it. See what you can get approved for. Because it may be the case that something you don't anticipate in the next couple of weeks as sound familiar, we've not anticipated a lot over the last couple of weeks may come to pass that would that would make this an option where you would have wished that you had applied two weeks ago. And so I think for I mean, there's no cost to apply other than your time. And you don't have to take the loan if you're approved for it or you can take less than what you're approved for. And so I think that's that's an important point. The other point I would make too is talk to your local units of government and economic development organizations because right now, there are a lot of local groups, counties, economic development organizations, Main Street organizations, chambers that are rolling out, are have already rolled out new and innovative programs to help small businesses and their county. So I'll give an example Grant County has repurposed their revolving loan fund from USDA to a give out a small, I mean, we're talking, you know, $7,500 or so under $10,000 to help small businesses get through this this time of worry, but you know, I would say can look at it as a toolbox, there are a lot of different tools in the toolbox, some things are better for certain expenses, some things will be needed for others, but this is one and any additional programs that come out will be others. And so that's from a business point of view, you have diversity, don't be relying on one financing vehicle to save your business.

Eric Armacost  40:37  
You know, startup business, this is projected to open at the end of March good eight or alone?

This is Eric again. So the answer is probably, essentially what the requirement is that the business was formed prior to the disaster declaration and have some fixed expenses. So in other words, if it's conceptual, and you've finally created the business, but you've had no fixed expenses, no AP, no commitments, essentially, for ongoing expenses, that's going to be a little tougher to get approved for because you've formed the business and has signed a lease and have agreed to hire people or or have agreed to buy a product of the junior group taking delivery of an advocate for yet or haven't even taken delivery I've yet to committed to buying, then the answer is probably yes.

What funding that's not alone is available, if we need to shut down temporarily.

Erica  41:34  
I can miss David, I can take a first stab at that. Really, the only thing that's available at the moment, that is not alone, would be a local program. And some of those are grant programs. Most of them are also loan programs. So it as it relates to your business. Obviously, if you shut down temporarily, and you have workers who need assistance, then we have certainly state unemployment, you would work with the Indiana Department of Workforce Development. And they've been doing a lot to try and you know, normally in Indiana, we've got a one week waiting period before somebody can claim unemployment. They've we're working or have already waived that requirement so that people can file for unemployment as soon as possible. But at the moment, the only programs funding programs that I'm available that I'm aware of that are not alone would be something at the local level, and we've got 92 counties in the state, a state of Indiana, so it would be best to go talk to your county chamber or economic development organization. I don't know if if outside of that we're talking crowdfunding, or you know, like Facebook is supposedly giving away several million dollars in grants, you can try applying for one of those.

Eric Armacost  42:56  
And I saw, GoFundMe also has a has a micro loan or micro grant available.

Erica  43:06  
Yes, I've seen that one as well. And if you're in Indianapolis, for example, I know that the Liske indie in which is a local organization focused on kind of community development, they've partnered with a online i don't want to call it a crowdfunding, but it's essentially like a quasi crowdfunding lender. But it's Kiba K i, b. A. And that's that's the Liske indie, if you're located in the central Indiana area.

Eric Armacost  43:37  
Alright, what is there to help manage payroll during this time, I think you've covered it a little bit. Anything else you want to add? Regarding payroll, either review.

So this is Eric. And I would say again, just to kind of streamline stuff, I think to David's point, it makes sense to check your local resources, there may be something available in your area that I'm not familiar with. Absent that, I would turn to your lender of choice and ask them to help you provide or help them or ask them to help you provide some short term working capital. So she can continue to make payroll with the understanding that that short term funding is going to likely be paid off with some more permanent solution after the full response is formed and implemented on the part of the government.

What are my options if I employ less than 50 people? I think you've covered that also but same answer. Yes, sir. All right. Next slide. If there is any other questions, so from email so what is used to determine the monthly average payroll what are what past period is used to determine the monthly average payroll?

This is Eric. To be frank. This is determined by the underwriting process that the Office of disaster assistance will oppose. I think it's typically your past six months payroll, we know that there are some businesses that are seasonal, for example, though, so maybe it doesn't make sense to look at the last six months and maybe look make sense to look at the same period from last year. And that's more representative of what the expectation is. So it's, it's gonna change a little bit from tomorrow or tomorrow work, but essentially, they're gonna look at your historical and make a determination based on that.

What all is included, besides wages?

So this is a tricky question. And I would actually defer to my good friend, David Watkins, to to maybe speak to this to a bigger extent, what the SBA is trying to measure is the extent of the economic injury to your business on wages is an obvious one. But there may be lost sales, how to demonstrate that and document that is a little slippery. So you may need some technical assistance to get that done. The SBDC is a great place to get that resource.

Erica  45:55  
Yeah, I mean, in so that would I mean, it does go far beyond that. I mean, even all the way down to you know, we've got small businesses that, you know, they sell to school districts, right, I mean, their foods or food provider to a school district, school districts are close. So we're using, say, the school district announcements of their closures to justify the economic injury. You know, so as Eric pointed out, the economic injury disaster loan can go for a lot like payroll, AP, any fixed debts, that kind of thing. And so being able to show that loss or that economic injury, you know, maybe if you're, if you're a retailer, it's you know, the number of people that have visited your store, if you're a manufacturer, it's the number of employees who have had to stay home because their kids are home from school or because they're not feeling well. So there can be a number of different avenues to explore exactly what that that injury is, and help SBA, you know, understand what, what size of loan you would possibly need.

Eric Armacost  47:01  
I received a question regarding regarding that regarding business valuation that is there going to be what is how are you going to quantify the injury if you're not going to require any kind of pre and post valuation work? Correct?

Typically, not in terms of business valuation, we're not necessarily looking at the total enterprise value from for the purposes of disaster assistance, we're really looking at the economic injury based on lost sales or lost revenue, or other sorts of fixed expenses, in the absence of revenue that a business might experience not so much a overall enterprise value.

Erica  47:42  
Yeah, yeah. And I mean, so then, then it becomes helpful, though, to have comparative to do some comparative analysis, hey, in March of last year, my business made this much. And in March of this year, I'm projecting that it will make this much or in April, I had, you know, 12, events booked at my at my event venue, and now I have zero. And, you know, having that comparative analysis so that the SBA loan officer with the Disaster Assistance Office, can can see that themselves and understand what it is that has been lost. That's really what they're looking for.

Eric Armacost  48:18  
Yeah, that was along the same lines. But what I said I mean, I can't envision that anybody would require that, but But nevertheless, I thought I would ask, what happens if additional funds or after this initial wave of loans come through? What happens if there's additional funding that's required?

That's a fantastic question. So we don't have 100%, transparency on one on how this is going to unfold. What I can tell you is every consideration is going to be made to assist small businesses as we move through this crisis. So we're phasing in solutions. Nope. Frankly, what we're facing in the solutions that we have available right now. And we're building new tools to help address the need as it as it evolves and develops and we come to understand how we can be most impactful there was there's many considerations given to or examined as we look at a that's already been assisted with what we're already been given compared to new programs. I think the intent here is to be, you know, kind of err on the side of being generous in the sense of providing the full breadth and scope of relief is going to become available later.

Erica  49:28  
Eric, correct me if I'm wrong, though, specific to the economic injury disaster loan, if say I initially apply and work with the SBA to get a loan at a value of a million dollars, and this thing kind of keeps going on and we're still closed and I realized that I need an extra $200,000. Can I go back to the SBA disaster office and get an increase on that?

Eric Armacost  49:54  
You know what, David that that's a great point. And you're absolutely right. So yes, you can absolutely go back and request to me increased slammed with substantiation. So if you're approved for, say, a million dollars today, based on your documentable economic injury, this thing drags on further than we expect it to and down the road, you realize that another $200,000 in additional funding, not available through conventional lenders is going to be required. And absolutely go back and ask for an increase on that economic injury disaster loan.

All right. Let's see, back to the email. My understanding is this is via banks in the SBA programs, is that correct? I think you said that it was, you have preferred lenders as well as you should go to your lenders as well as directly to the SBA. Correct?

Yep. So let me let me restate. So there's there are actually two vectors or two channels two ways to approach this economic injury, or the support of economic disaster recovery. One is, yes, prove your conventional lenders. They are for the most part, awaiting pending legislation to take advantage of some of the proposed enhancements to SBA lending. So although we were encouraging our lenders to make bridge financing for the immediate needs, we need to make payroll tomorrow and you don't have to cash, your lender should be able to help you with interim financing to help you meet that immediate need. That's not going to be part of the longer term, SBA supportive solution to get to the recovery of this economic crisis. So it's short term financing for your traditional lenders. There is long term economic injury disaster loan funding available directly from the SBA right now. And the reason for that, frankly, is that that's the tool we had in our toolbox. When this unfolded, we're having to develop new tools to respond to this unprecedented event.

The these next few questions are related to forgiveness. Do you want to look into the crystal crystal ball? Or do you want me to move on to two other questions?

I am not going to speculate on loan forgiveness, I suspect that some shape form or fashion of loan forgiveness is going to be part of the final legislation is enacted. I understand that there's a this concept of having, you know, some portion of funding via grant right now. And then some portion of funding be some portion of your overall funding package be forgivable loan provided that those two aspects are used to support payroll. That is speculation at this point not enacted. I expect that there'll be some form of that, but we can't say exactly what shape is going to take at this point.

But as far as application, it should be it should be made. As soon as it's available, you should be applying for it correct.

It's going to be a big line. You want to get it?

Yep, I get it. Okay, I can't answer that. All right. Let's move over to over to the chat. Any consideration for newer startups that had limited payroll in 2019? I think you've said go ahead and apply that. That would qualify.

Yeah. Apply. David, once you speak to how you're what you're doing to help them projections just to show what the economic injury is, in the case of payroll is not yet booked.

Erica  53:07  
Yeah, yeah. So, explosively. Actually, we've been on calls with disaster office that, that they're encouraging startups from late 2019, or even early 2020. To go ahead and apply again, you know, once you get with a loan officer there, and this is where the projections become really, really key, right? I mean, there may not be a comparative period, right. So we can't go from March 2020, to look at March 2019. Or there may not be six months worth of sales to say, Okay, you average this much, this much a month, April should have been x. And so that's where it really becomes key to have well documented. Here were the the here were the contracts we had, right or here were the sales we anticipated. Here are the customers who have shut down because of this pandemic, and to be able to walk the loan officer through that process. You know, we can't obviously I I can't make any promises on what an individual loan officer will do or what the SBA disaster office will do. But they have been explicit and encouraging startups to go ahead and apply. Understanding that you're going to have the they're going to be relying on your projections, which essentially comes down to your ability to demonstrate injury and your ability to demonstrate that you can repay the loan at a later date. Right. So that's ultimately what it's going to come down to. Okay.

Eric Armacost  54:36  
Next question is I sent an online application through the SBA through their email, do I need to send it also through the mail?

The short answer is no. So if you've applied online or via emailing the disaster loan center, a hardcopy mail version is not going to be required. I'm not really against the initial application. I say that with this qualifier. If they're asking for additional documentation and say it's a tax return an answer, we know we have a really big tax return, you may need to consider mailing that, simply because document upload size, I think has been improved significantly, but may be limited depending on your specific case.

Okay. Mandy asks, and this is a big one, we have 17 applications started and are extremely close to being completed, we are unable to log back into our account, do we need to start over and paper apply? Or will will we be able to log back into our account?

So listen, I'm going to be perfectly frank, I don't know the answer to that question. I am aware that essentially the the original web portal web application portal, quite frankly, became overwhelmed with the amount of volume that it was experiencing. And we realized by we only organizationally realized we didn't have sufficient resources and a process that would accommodate the the volume of applications that we have, we are told that they're going to be able to relaunch the original portal and should be able to re access those applications. At some point in the future, that's not today. And then when that's going to be I can't tell you, if I were in that position, and I know this is not the answer anybody wants to hear. But if I were in that position, and I was concerned about getting myself into this line to get funding, I would go back to the new portal, and then do the fillable PDFs and upload those to the new portal. Again, there's no cost. There, there's some duplication of effort. And I recognize that. But I think given the option of waiting to see what solution our IT folks come up with, or reapplying, I would personally reapply into the new process.

Erica  56:44  
And while you start that, I would also say go ahead and call that disaster assistance office phone number that Eric has in his slides. Again, long wait time, but if you're sitting there going through some of these application materials, again, go ahead. And just to hop on the phone, I have had, we have had clients get through and actually talk to a person at that office and you know, given the situation and understandably reasonable amount of time.

Eric Armacost  57:11  
Okay, these next two, Lindsay and Vic. So this is regarding the the slide deck and Eric talking too fast and Lindsay not being able to hear Eric. So, again, we will make this slide deck available. The webinar in its entirety is being recorded in to two separate places. So you the video, the everything that you're hearing is going to be the webinar in its entirety will be uploaded and available. as well. It will be the audio will be on our podcast defenders of business value. So if you missed anything, don't sweat it. We'll do that as well as we probably can get this transcribed for you if you need it. Alright, next question. Do I apply locally in my city? The address to send the application is in Texas. Is that correct? Even though I live in Indiana?

So the preferred method of application is actually electronically through the web portal. If you're going to mail in a paper application, the correct place to submit that is that address and Fort Worth Texas? Yes, sir.

What form is used for the sole proprietor?

That is form five C five, Charlie.

All right. Let's see. Next question is can you address how the loan amounts will be determined?

in very general terms, they're going to look at your historical cash flow and make a determination based on that.

Okay, next question, Kevin. Yes, the slide deck will be available as well as video and audio. All right. Next question. Are you going to go through title insurers to file a lien on the hotel on hotels? How long will that take?

So that's the only question. The reality is at this point, I believe that the optimal disaster assistance is actually sending the title work directly to the applicant and requiring that they file on their own. I know that's complicated given that many cuts county governments are currently suspended or working remotely. And that can complicate the issue I can tell you that they're making full accommodation in terms of the timing of those filings. So as long as you're operating in good faith and making good faith efforts to find all the security agreements to to agree to as part of your loan acceptance. You're going to be in a shape.

Okay. Same Hotel. If hotel has a CMBS loan, I'm unfamiliar with that one, which precludes additional liens does that disqualify all hotels with cm B? As loans.

So commercial mortgage backed security loans are a little a little tricky. Typically, those actually can bring into consideration the notion of affiliation. Sometimes those are considered to be direct investments on the part of the issuer of the CMBS. So I would encourage you to apply, and that determination is going to be made on a case by case by case basis. I can't make a blanket statement about that.

All right. Eric made it sound like the SBA assesses how much business gets how much a business gets for the eidl. David seems to imply the business can provide info, can you provide some clarification?

Yes, the SBA is going to determine your loan amount and based on your input, essentially, your historical cash flow plus any projections and we're going to offer you a loan amount based on what your historical cash flow plus any projections would reflect.

Erica  1:01:00  
It's completely it's based on what you submit. So it's, it's both.

Eric Armacost  1:01:07  
Okay, you guys might have to fill in the pieces for this. The next question is, do you have to be in operation for a year perform p 019?

I'm not gonna lie. I'm not sure that I know what form p 019. Is. But But no, generally you don't have to be in business for a year. Yeah.

See, Helen, yes, we're going to be sending audio and video. Will the loans be dispersed in full are treated like a line of credit or construction loan?

They're, generally speaking, funding happens in either one or two phases. So up to $500,000. They often ask for assistance is doing sort of a truncated or a streamlined underwriting process up to that credit limit. So if your loan is that size or lower, that's going to be your full disbursement. And essentially, it's going to happen in one disbursement. If your loan request is approved for greater than $500,000. That first tranche of $500,000 will be underwritten first and typically dispersed for any amount over that's going to have a more thorough underwriting and will be dispersed in a second disbursement later. So so five or $1,000, or less, typically one disbursement larger than $500,000, typically due to disbursements, and again, you can come back for an increase later. But the more direct question with regard to line of credits, no, it will be a term loan, not a revolving line of credit.

Okay, the next question is, is, is 50 billion the amount of proof for the eidl. Now before any new bills pass? If so, isn't it likely going to run out before all are covered?

Yes, let's see if it's approved now. Which likely will not just likely it's highly likely we're going to have additional funding to support the eidl. It is conceivable that funding would run out on that on the on the current allocation, or appropriation, but I suspect that everybody's got an eye on keeping levels at a sustainable point.

All right. Thank you. Next question is under the new paycheck protection program. You were precluded from this new program, if you receive funds from the disaster loan for payroll purpose. What happens if a taxpayer receives from funds from the paycheck Protection Program and wants to later file for the disaster loan? Is there a period of time that must elapse before you are eligible for the other program

has not yet been determined?

Assuming a owner receives financial relief for payroll, how does he or she receive income that would normally come in the form of distributions or would the owner be in the payroll subsidy?

So typically disbursements or routine disbursements anyway are taken into consideration when when examining the extent of the economic injury. So similar to looking at the average payroll, they're gonna look at the average disbursements and take that into consideration when when underwriting the loan and determining the loan size.

I'm a CPA and I want to help clients prepare their applications, but I don't want to charge them or have them pay if they don't qualify. But I know there is no contingency provision can cost for preparing financials, tax returns, etc be separated under the cost to just fill out the application so I could not charge for those services if they can't afford it.

There's an SBA form 159 D Delta that service providers can use to document the fees that they're charging as long as they're reasonable. Typically, SBA will examine those and, you know, there's there's some flexibility on this. They asked here is that you be considerate when when when charging fees to clients for helping them with your application package, that the maximum amount that's allowable without extending pre scrutiny is about $3,500 per application.

Okay. Let's see. All right, on the disaster relief loan question, they're asking for what, what last rents, we leased space? And that's not what they're asking for. We see no place. They want to know what obligations for monthly lease payments we owe.

That's absolutely part of the lease. Third question the liability schedule. lease payments are absolutely part of that.

Erica  1:05:58  
Schedule liabilities form. Eric's got the number in the slide deck. Got it?

Eric Armacost  1:06:04  
All right. I own two small taverns they make they make tips, how will I know the appropriate wage to give employees such as? Are we only allowed to give them a minimum wage? Or will it be based on the norm on what they normally make with tips?

Would you want to take that one?

Erica  1:06:28  
I can give it a go. Any new legislation? unknown unknown at this time? I know that there are provisions that the Congress just talking about as it relates to the new programs that they're that they're exploring with payroll forgiveness. But again, that's worth nothing right now. It's worth less than the paper it's written on. As it relates to the economic injury disaster loan. I correct me if I'm wrong, Eric, but you can include that in your schedule of essentially liabilities, but the loan proceeds can be used to cover payroll.

Eric Armacost  1:07:04  
Correct. I guess what I was getting at I think you've probably worked with a client as they determine what the total compensation for their employees losses. Both wages, yes, but also tips, correct?

Erica  1:07:14  
Yes, both? Both are certainly included in that calculation. Yeah, absolutely. So as it relates to economic injury, disaster loan, those loan proceeds can be used to cover payroll that payroll calculation, as we work with you on if you work with the SBDC on that, with your projections and understanding the uses of the loan tips can become a part of that.

Eric Armacost  1:07:39  
Next question, what will be forgivable? I know, that's kind of a loaded question right now. Any hypothetical?

Just wanted, this woman wanted to see if he'd bite if someone who just purchased their business this year, will there be any hurdles in document in documenting historical financials or time in business, assuming they still have sellers, financials and payroll records.

So again, SBA is going to carefully examine the historical performance of the business post any reasonably assembled financial projections, I would actually strongly encourage a new business that is operating with the understanding they're going to match or exceed historical performance based on a previous ownership, I would encourage you to meet with the SBDC to develop projections that are reasonable that what you're expected to have occurred had this outbreak not happen.

Yeah, and for in for any of the clients that we've that we've worked with, obviously, we keep we keep historical data on the companies we sell. So certainly reach out to us and we'll give you whatever we have in order to help the process along. The next question, any indication for timeline for processing disaster loan applications? Or do you have any idea how many are already in queue?

So again, this total average turnaround time is somewhere between 21 and 30 days, the opposite disaster assistance as of last night, because reaffirmed that that's what they expect their typical turnaround time to be in terms of the total loan applications and process No, I don't have a number, but I can't tell you that it's enough to crash your website that was built to handle very high traffic.

The next question, seven A versus seven B relief loan versus SBA. I don't know what the question is, but other than clarification.

So there definitely again, there's going to be two channels. There. There's the best SBA direct loan program the economic injury disaster loan program, which you should apply for right now. There are there continue to be sba 7504 loans available through traditional bank to credit unions and lenders, and there are a lot of lenders that are actively working with their borrowers and their clients not just to defer payments on existing credit, but to extend additional credit or new credit to help them meet their their current needs. So it makes sense to start having a conversation with your lender now, and not one of these solutions is the answer, there's going to be a multi phase multi pronged solutions to this economic injury. And we're all going to have to kind of contribute to this, where we can integrate to the greatest extent that we can.

If you're if you were in the process, should you use that number on your current application or on the disaster relief application.

So again, those are two different channels. If you had a conventional seven, eight or five for loan application and process pre crisis, that application is still in process. And again, you should communicate with your lender to see kind of where you are on that time, if you've also applied for an economic injury disaster loan directly from the SBA, that's going to be a completely different pool of capital and a completely different application and process. So again, this these two are not interchangeable.

Okay. some clarification on the couple questions back, I read online that the Cares Act is not the same as the seven B sba eidl loan program that is already available online on the SBA website. What is the difference if I go through the bank or both?

So to reiterate, there's going to be two different solutions available or actually a combination and be more than two different solutions available. What's what's in place now is the SBA direct economic injury disaster loan program. That's the seven D program that the writer or callers was referring to, that is actually available right now you should apply. The Seven Day Program is a core SBA loan support programs that's that was in place pre crisis, it's being considered for enhancement under the Cares Act now. So that'll still probably be called The Seven a loan program, but it will be enhanced to meet some of the criteria that's being proposed in the Cares Act. We don't know exactly what shape it's going to take. But whatever shape that takes is definitely going to be delivered through our conventional banks, credit unions and other mission focused lenders. So two completely different channels, one direct from SBA with the economic injury, disaster loan, and then there's the seven eight program. And actually, there's other programs out there as well, that will come from banks, credit unions and mission focused lenders.

Erica  1:12:24  
My recommendation would be exactly like Eric's, which is apply for the economic injury disaster loan now, because that's what's available. And then also start a conversation with your lender about what other options are out there or could be out there, say next week or the week after the week after that. Start having those those conversations now and working with your existing lender or finding one that does SBA backed loans would probably be the best way to prepare for two reasons. One, the seven day program already exists, the 504 program already exists. If you don't have an SBA lender, you can go find one that already operates in those programs. Pre crisis as Eric mentioned, and.

Eric Armacost  1:13:28  
Hey, Edie, this is Eric and I can no longer hear audio from David, are we still connected?

Yeah, he, I'm in the same camp. I was just looking to see if it was on my end or his it appears on his. So we'll we'll let him want to make sure. Yep. We'll let him dial back in. Okay. Why don't we move into the next I only have a couple more questions. How much is proposed? That's available under the disaster injury program right now nationwide.

Yep, so So right now under the currently available economic injury disaster loan program, each farmer plus all their affiliates is eligible for up to $2 million in funding through that program alone and that will not affect your ability to receive additional funding through either the conventional seven a program doesn't exist now or whatever enhanced program gets rolled out once the Cares Act actually is enacted.

It and looks like we got David back. Welcome back. Thanks. Can you hear me? Yeah, we're good now. Did you want to you know, it's all right. It's we're all in the same camp.

Erica  1:14:44  
What what was the what was the last thing you heard?

Eric Armacost  1:14:48  
Most of it. Okay, good. Yeah.

Erica  1:14:53  
Yeah. All I was saying was just, there's we're getting a lot of questions and I know the SBA and Eric do specifically, but all of his colleagues are limited in what they can talk about as it relates to proposal to legislation. I'm somewhat less limited than then Eric is, but even then I'm not in a position to promise things or give definitive advice based on proposal legislation. We've got, you know, hundreds of members of the House of Representatives who still get to have their say on this piece of legislation. But I would say if you're, if you're a small business, that economic injury disaster loan is available today, right now, apply, not gonna take you that much time, go ahead and do that and apply. Anything that comes down the pike is going to come with an understanding that millions of small businesses have probably already applied for the economic injury disaster loan program. If it's if it's an enhancement to an existing SBA program, like the seven A, then make sure you're having conversations with your lender now about what did they do seven eight loans, if they don't go go to the SBA is website called lender match and find a seven a banker and start that relationship now. So that if in a week or two weeks or three weeks, there are new enhancements to the seven day program, you've already done that groundwork to have that relationship built to say, Hey, I'm, I want to go after this. We've got a relationship, and we can we can do that. Now. That would be my advice. If I had my own small business right now, that's what I would be doing. Yeah.

Eric Armacost  1:16:17  
And I would add to that, that, you know, we have relationships with with all of the preferred lenders, within the community. And if we can be a resource to you certainly reach out to us, we're happy to refer you to, to the folks that that we've worked with over the years. Alright, the last question is, would you be able to provide examples of how of, of how amount, how the amount of injury loan amount should be presented to the SBA officer would alright, but yeah, it's a little broken, but you get you get the gist. And then, then then the loan officer, how much authority do they have? Or latitude? Do they have to make the loan amount decision?

Erica  1:17:05  
I can maybe talk to the first part, and then maybe Eric can talk to the second part. On the first part, the guidance that we've received is essentially, this, the definition of this, this, and I don't mean to get kind of governmental on it, but I think it helps understand how SBA is approaching this. The disaster started January 31 2020. The end date of this disaster is, quote, unquote, ongoing. That's highly unusual. Normally, we talk about a tornado, the tornado came through at this time on this day, and it went out on this time on this day, and the economic injury lasted, XYZ is set, right? This is ongoing. So the guidance that we've received, the latest guidance I had from the SBA disaster office, is essentially February actuals, March actuals, are close to march actuals. And we were March 27, you should have a pretty good idea of where you're going to fall from March. And then April, May and June projected and then documentation to support that. So if you're if you're, if you're saying, hey, last April, we did you know just I'll use a hotel, perhaps will be easiest. Last April, we had this much in terms of occupancy. In April, we project this month because and then show the documentation gatherings of this number of people have been canceled. This number of weddings have been canceled. Here's here's the emails, our local state government gave us shelter in place order. These are not essential business, have that documentation ready to go with your projections to justify why you're saying hey, in April, May and June, we're not going to make any money or a whatever that projection is. So then maybe Eric can talk about the authority of the loan officer.

Eric Armacost  1:18:48  
Like I came to a limited extent, what I can tell you is number one, the officer disaster assistance as the underwriter economic injury, disaster loans, they follow basic formulas now, they won't disclose even to us internal partners exactly what their formulas are. But it's probably going to be something like well, your you know, gross proceeds or your gross profit from last year divided by 12 times however many months, we think we're gonna have this economic injury in place. Now. That's my speculation. But to do something like that, they're going to make some reasonable basis for the economic injury based solely on your Japan's revenue and or some reasonable objections that are developed and submitted along with your application. So exactly what probably they're going to use, I don't know, it's going to definitely based on history plus any projections, they're going to have to kind of justify anything that varies too much from whatever formula that they're that they're authorized to use. They're going to have some authority to flex on that, provided that the borrower has the ability to demonstrate that, hey, you approve me for X amount, but I have this documentation that shows there really should be x plus and the reason that I'm having a plus is because of these reasons that might be because my business is seasonal, and I'm coming into the busy season or that you know my particular industry. is more hard to and some other industries, but they'll do what has to be justification to deviate from whatever formula they're following.

Okay. Two more questions after the two more questions just said, from email, where do we go on the SBA site to learn the status of our application.

So right now, the the application status portal, myself, I had to be careful as of six o'clock this morning, it was not functioning properly. So your best recourse is to call the disaster loan Customer Service Center and ask them for the status of your loan, I recognize that there's a long queue to talk to a human being it's a disaster loan Customer Service Center. But here locally, we don't have access to the to the application queue. Moreover, I know for sure that they're working to reinforce the portal, both the application portal and the application status portal to ensure that they're more robust and able to handle a higher volume of traffic, when that's going to be resolved. I can't tell you, but I can tell you that everybody is working as hard as they can to get that resort.

Okay. Our last questions. I'm trying to determine whether it's more comment than question, but I'll let it rip. And you guys can take it from there. The additional liabilities forum for the economic relief app is not part of the personal financial statement. It is confusing because we printed out all of the forms to do on that paper after losing our application in process before the before the crash. That number is what I was wondering if we should use on our paper application. Second, there is no place to show the business income on the personal financial statements. So should that lease debt be on that liability sheet? To be added? Thank you.

So it sounds like a pretty application specific question. So the short answer is no your your business income should be reported as part of your business income your PFS is personal financial statements should be listed there, your list of liabilities should be definitely on your schedule of liabilities. If you have an application number from your previously electronically submitted application, and you can provide it great if you can't, I wouldn't sweat that if your application and ultimately their system is going to catch the employee identification number social security numbers associated with both applications and should be able to reconcile those internally. Obviously, it makes it faster and easier if they have the application number to refer to. But yeah, I wouldn't sweat that too much in terms of the application documentation. Here's what I would say, try to try to keep the business aspect of it separate from your personal aspects. So PFS, just personal and then anything else goes on a different form. And I can also tell you, as a human being is going to review this. So if you don't know exactly where to put something, don't don't sweat it, you're going to have a conversation with a loan officer, you may have to explain exactly what you're trying to get at. Fill it out to the grease just stand or the greenest possibility you can and then get it submitted. I think that that's maybe the more important part, we can hash out the details when the loan officer calls Yeah.

Okay. David, you got any thing you want to add? Sounds good to me. All right. Any, any? I don't have any. I'm just checking the email as well as the chat, it appears that all of our questions have been answered. Do either of you to have any any final thoughts before we we let you get back to doing what you do?

Erica  1:23:29  
I go ahead, David. I was just gonna say, you know, we've, obviously things are changing every single day. And our SBA office here locally in Indiana is doing an outstanding job connecting people with their disaster office, which is, you know, not here in Indiana. And, you know, at the Indiana Small Business Development Center and the Economic Development Corporation. You know, we have been trying our best to get the most timely and accurate information out to small businesses as possible. So, you know, if you have a question, reach out if it's an application specific question about the economic injury, disaster loan, it's not something that we can easily answer other than broad guidelines. But as much as we're able to, we're trying to get accurate and, and actionable information out to as many people as possible. So I'd say just stay tuned, because it sounds like there's gonna be a lot of changes come down the pike.

Eric Armacost  1:24:26  
Eric, I just hope PreparedStatement but I'm just gonna say ditto.

You Yeah. Well, I hope once the dust settles after this, you'll come back on because I'm based on the number of people that had the opportunity to hear this. I'm certain we're going to have more questions. So with any luck, the two of you will come back and visit with us.

Erica  1:24:51  
Yes, sir. Great. Love to

Eric Armacost  1:24:53  
well, you know, truly on behalf of all these people that that stayed

uh listening to you guys you know we're so grateful for the for the time you spent with us and hopefully clarified and moved move business owners that are hurt hurting so bad to just try to stay in business that you moved us at least down the road to fight another day. So thank you all for for being with us. As I mentioned the webinar will be is recorded and will be available on our on our website and chose and shield meaning Chelsea our marketing director will send that out to everyone that was in attendance as well as everyone in our database. It will also be posted on to our defenders of business value podcast. So that concludes this webinar. If you have any questions for any of us. The slide deck also will be available you see the emails and contact information for all three of us. Certainly don't hesitate to reach out and we'll get you to the right to the right place. Thanks so much and have a great day.